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on Experimental Economics |
| By: | Nava Ashraf; James Berry; Jesse M. Shapiro |
| Abstract: | The controversy over whether and how much to charge for health products in the developing world rests, in part, on whether higher prices can increase use. We test this hypothesis in a field experiment in Zambia using door-to-door marketing of a home water purification solution. Our methodology separates the screening effect of prices (charging more changes the mix of buyers) from the psychological effect of prices (charging more stimulates greater use for a given buyer). We find that higher prices screen out those who use the product less. The amount paid does not have a psychological effect on use, but there is some evidence that the act of paying increases use. We use our data to estimate an economic model of product use, simulate counterfactuals, and develop tentative implications for pricing policy. |
| JEL: | C93 D12 L11 L31 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13247&r=exp |
| By: | Saez, Emmanuel |
| Abstract: | We examine the effects of presentation and information on the take-up of financial subsidies for retirement saving in a large randomized experiment carried out with H&R Block. The subsidies raise take-up and contributions, with larger effects when the subsidy is characterized as a matching contribution rather than an equivalent-value tax credit (or cash back), and when filers are informed before the tax season about the subsidy. The results imply that both pure incentives and the presentation of those incentives affect consumer choices. |
| Keywords: | Field experiment; Retirement Savings incentives |
| JEL: | H31 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6386&r=exp |
| By: | Lanse Minkler (University of Connecticut) |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2007-27&r=exp |
| By: | Arkes, Hal; Hirshleifer, David; Danling, Jiang; Sonya, Lim |
| Abstract: | We examined prospect theory and reference point adaptation following gains or losses using participants from China, Korea, and the US. Supporting prospect theory, we found in Studies 1 and 2 that subjects from all three countries generally exhibited loss aversion and a greater propensity for risk seeking in the loss domain than in the gain domain. In Study 3 we used the Becker, DeGroot, and Marschak (1964) procedure to ascertain the valuation subjects placed on a gamble after either a prior gain or a prior loss on a stock. After inferring the shift in each subjectâÃÂÃÂs reference point following this prior gain or loss, we found that reference point adaptation following a gain exceeded that following a loss in all three countries. In our third study we also had subjects sell and then immediately repurchase a stock that had experienced a prior gain or loss, which was designed to âÃÂÃÂpunctuateâÃÂàor close the mental account containing the prior gain or loss. This manipulation caused an increase in reference point adaptation among the Americans but a decrease among the Asians. |
| Keywords: | prospect theory; cross-cultural differences; reference point adaptation; mental accounting |
| JEL: | D81 G11 |
| Date: | 2007–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4009&r=exp |
| By: | Mengel, Friederike |
| Abstract: | We present and analyze a local interaction model where agents play a bilateral prisoner's dilemma game with their neighbors. Agents learn about behavior through payoff-biased imitation of their interaction neighbors (and possibly some agents beyond this set). We find that the [Eshel, I., L. Samuelson and A. Shaked, 1998, Altruists, Egoists and Hooligans in a Local Interaction Model, Am. Econ. Rev 88] result that polymorphic states are stochastically stable in such a setting is not robust. In particular whenever agents use information also of some agents beyond their interaction neighbors the unique stable outcome is one where everyone chooses defection. Introducing a sufficiently strong conformist bias into the imitation process we find that full cooperation always emerges. Conformism is thus identified as a new mechanism that can stabilize cooperation. |
| Keywords: | Cooperation; Imitation; Local Interaction; Conformism. |
| JEL: | C72 C73 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4051&r=exp |
| By: | Huisman, R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | It is well known that day-ahead prices in power markets exhibit spikes. These spikes are sudden increases in the day-ahead price that occur because power production is not flexible enough to respond to demand and/or supply shocks in the short term. This paper focuses on how temperature influences the probability on a spike. The paper shows that the difference between the actual and expected temperature significantly influences the probability on a spike and that the impact of temperature on spike probability depends on the season. |
| Keywords: | Day-ahead power price;Power production;Temperature;Spike probability; |
| Date: | 2007–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:300011417&r=exp |
| By: | Hardy-Vallee, Benoit |
| Abstract: | This article introduces and discusses from a philosophical point of view the nascent field of neuroeconomics, which is the study of neural mechanisms involved in decision-making and their economic significance. Following a survey of the ways in which decision-making is usually construed in philosophy, economics and psychology, I review many important findings in neuroeconomics to show that they suggest a revised picture of decision-making and ourselves as choosing agents. Finally, I outline a neuroeconomic account of irrationality. |
| Keywords: | neuroeconomics; decision-making; rationality; ultimatum; philosophy; psychology |
| JEL: | B50 D01 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4010&r=exp |
| By: | Stanton, Angela A. |
| Abstract: | In economic experiments decisions often differ from game-theoretic predictions. Why are people generous in one-shot ultimatum games with strangers? Is there a benefit to generosity toward strangers? Research on the neural substrates of decisions suggests that some choices are hormone-dependent. By artificially stimulating subjects with neuroactive hormones, we can identify which hormones and brain regions participate in decisionmaking, to what degree and in what direction. Can a hormone make a person generous while another stingy? In this paper, two laboratory experiments are described using the hormones oxytocin (OT) and arginine vasopressin (AVP). Concentrations of these hormones in the brain continuously change in response to external stimuli. OT enhances trust (Michael Kosfeld et al. 2005b), reduce fear from strangers (C. Sue Carter 1998), and has anti-anxiety effects (Kerstin UvnÃÂäs-Moberg, Maria Peterson 2005). AVP enhances attachment and bonding with kin in monogamous male mammals (Jennifer N. Ferguson et al. 2002) and increases reactive aggression (C. Sue Carter 2007). Dysfunctions of OT and/or AVP reception have been associated with autism (Miranda M. Lim et al. 2005). In Chapter One I review past experiments with the ultimatum (UG) and dictator (DG) games and visit some of the major results in the literature. In Chapter Two I present the results of my laboratory experiment where I examine why people are generous in one-shot economic games with strangers. I hypothesize that oxytocin would enhance generosity in the UG. Players in the OT group were much more generous than those in the placeboâÃÂÃÂOT offers in the UG were 80% higher than offers on placebo. Enhanced generosity was not due to altruism as there was no effect on DG offers. This implies that other-regarding preferences are at play in the amount of money sent but only in a reciprocal context. The third chapter presents an experiment on punishment. I hypothesized that AVP would increase rejections and stinginess in the UG and TG. Results show that AVP affects rejections and stinginess in small groups but not in large ones. Chapter Four contains the summary of future research suggestions. |
| Keywords: | Oxytocin; Vasopressin; ultimatum game; dictator game; trust game; generosity; altruism |
| JEL: | Y40 D01 Z00 |
| Date: | 2007–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4030&r=exp |